PROJECT MANAGEMENT &

OPERATIONS RESEARCH
 UNIT-III

Project Scheduling with CPM and PERT &

Project cost control
 CONTENTS
 Network diagrams

• Critical path method

• Project evaluation and Review technique.

 Project Cost Control

• Normal time and Crash time & Direct cost and Indirect cost

• Time-cost Trade-off

• Crashing of project
 Introduction to CPM / PERT Techniques

 CPM/PERT or Network Analysis as the technique, developed along two parallel

streams, one industrial and the other military.

 CPM (Critical Path Method) was the discovery of M.R.Walker of E.I.Du Pont de
Nemours & Co. and J.E.Kelly of Remington Rand, circa in1957.

 PERT (Project Evaluation and Review Technique) was devised in 1958 for the
POLARIS missile program by the Program Evaluation Branch of the Special
Projects office of the U.S. Navy.
 Applications of CPM / PERT
 Construction of a dam or a canal system in a region  Construction of a building or
highway
 Maintenance or overhaul of airplanes or oil refinery
 Space flight
 Cost control of a project using PERT / COST
 Designing a prototype of a machine
 Development of supersonic planes
 Benefits of PERT/CPM
 Useful at many stages of project management
 Mathematically simple
 Give critical path and slack time
 Provide project documentation
 Useful in monitoring costs
 The Framework for PERT and CPM
Essentially, there are six steps which are common to both the techniques.
The procedure is listed below:

I. Define the Project and all of its significant activities or tasks. The Project (made up of
several tasks) should have only a single start activity and a single finish activity.
II. Develop the relationships among the activities. Decide which activities must precede
and which must follow others.
III. Draw the "Network" connecting all the activities. Each Activity should have unique
event numbers. Dummy arrows are used where required to avoid giving the same
numbering to two activities.
IV. Assign time and/or cost estimates to each activity.
V. Compute the longest time path through the network. This is called the critical path.
VI. Use the Network to help plan, schedule, and monitor and control the project.
 Network Diagram Representation
In a network representation of a project certain definitions are used
1. Activity Any individual operation which utilizes resources and has an end and a
beginning is called activity. An arrow is commonly used to represent an activity with its
head indicating the direction of progress in the project. These are classified into four
categories
 Predecessor activity – Activities that must be completed immediately prior to the start
of another activity are called predecessor activities.
 Successor activity – Activities that cannot be started until one or more of other
activities are completed but immediately succeed them are called successor activities.
 Concurrent activity – Activities which can be accomplished concurrently are known
as concurrent activities. It may be noted that an activity can be a predecessor or a
successor to an event or it may be concurrent with one or more of other activities.
 Dummy activity – An activity which does not consume any kind of resource but
merely depicts the technological dependence is called a dummy activity.
 Network Diagram Representation
 The dummy activity is inserted in the network to clarify the activity pattern in
the following two situations
 To make activities with common starting and finishing points distinguishable
 To identify and maintain the proper precedence relationship between activities
that is not connected by events.
 For example
 Network Diagram Representation

Event : An event represents a point in time signifying the completion of some activities
and the beginning of new ones. This is usually represented by a circle in a network
which is also called a node or connector.
The events are classified in to three categories
1. Merge event – When more than one activity comes and joins an event such an event is
known as merge event.
2.Burst event – When more than one activity leaves an event such an event is known as
burst event.
3. Merge and Burst event – An activity may be merge and burst event at the same time as
with respect to some activities it can be a merge event and with respect to some other
activities it may be a burst event.
 GUIDELINES FOR NETWORK DIAGRAM
 Before an activity can begin, its preceding activities must be completed.
 Arrows indicate logical precedence.
 Flow of the diagram is from left to tight.
 Arrows should not intersect.
 Dangling should be avoided.
Sequencing
The first prerequisite in the development of network is to maintain the precedence
relationships. In order to make a network, the following points should be taken into
considerations
 What job or jobs precede it?
 What job or jobs could run concurrently?
 What job or jobs follow it?
 What controls the start and finish of a job?
Since all further calculations are based on the network, it is necessary that a network be
 Abbreviation
 PERT- Project Evaluation and Review  CPM- Critical Path Method
Technique
What does It Mean?
 PERT- PERT is a popular project  CPM- CPM is a statistical algorithm
management technique that is applicable which has a certain start and end time for
when the time required to finish a project a project
is not certain
Model Type
 PERT- PERT is a probabilistic model  CPM- CPM is a deterministic model
Focus
 PERT- The main focus of PERT is to  CPM - The main focus of CPM is on a
minimize the time required for trade-off between cost and time, with a
completion of the project major emphasis on cost-cutting.
Orientation type
 PERT- PERT is an event-oriented  CPM- CPM is an activity-oriented
 Fulkerson’s Rule for numbering of Events
1.Identify the initial event and assign it number 1. Initial event is the starting point
of any project(no arrow entering it).
2.Delete all the emerging arrows from the initial event[1].This will create one or
more new initial events. Number these new initial events as 2,3,4 … etc.
3.Repeat this process by continuing until all nodes are numbered.
Example 1 : Assign numbers to the events of the following network diagram
applying Fulkerson’s Rule.
Example 2
 Critical Path in Network Analysis
Basic Scheduling Computations
The notations used are
(i-j) = Activity with tail event i and head event j
dij = Estimated completion time of activity (i-j)
(Es)ij = Earliest starting time of activity (i-j)
(Ef)ij = Earliest finishing time of activity (i-j)
(Ls)ij = Latest starting time of activity (i-j)
(Lf)ij = Latest finishing time of activity (i-j)
The procedure is as follows
1.Determination of Earliest time (E j): Forward Pass computation
Step 1
The computation begins from the start node(event) and move towards the end node(event).
For easiness, the forward pass computation starts by assuming the earliest start time of zero
for the initial project event.
Step 2
i. Earliest start time of activity (i-j) is the earliest event time of the tail end event
i.e. (Es)ij = Ei = 0
ii. Earliest finish time of activity (i-j) is the earliest starting time + the activity time
i.e. (Ef)ij = (Es)ij + dij or (Ef)ij = Ei + dij
 Earliest start time is the maximum of the earliest finish times of all activities ending into
that event
i.e. Ej = max [(Ef)ij for all immediate predecessor of (i-j)] or Ej =max [Ei + dij]
2.Determination of Latest finish time (Li): Backward Pass computation
Step 1
For ending event assume E = L.
Remember that all E’s have been computed by forward pass computations.
Step 2
Latest finish time for activity (i-j) is equal to the latest event time of event j
i.e. (Lf)ij = Lj
Step 3
Latest start time of activity (i-j) = the latest completion time of (i-j) – the activity time
or (Ls)ij = Lj - dij
Step 4
Latest finish time is the minimum of the latest start time of all activities originating from
that event
i.e. Li = min [(Ls)ij for all immediate successor of (i, j)] = min [(Lf)ij - dij] = min [Lj - dij]
Determination of floats and slack times
There are three kinds of floats
 Total float – The amount of time by which the completion of an activity could be
delayed beyond the earliest finish time without affecting the overall project duration.
Mathematically, (Tf)ij = (Latest start time – Earliest start time) for activity (i-j)
(Tf)ij = (Ls)ij - (Es)ij or (Tf)ij = (Lj - dij) - Ei
 Free float – The time by which the completion of an activity can be delayed beyond the
earliest finish time without affecting the earliest start of a subsequent activity.
Mathematically, (Ff)ij = (Earliest time for event j – Earliest time for event i) – Activity
time (Ff)ij = (Ej - Ei) – dij
 Independent float – The amount of time by which the start of an activity can be delayed
without affecting the earliest start time of any immediately following activities.
Mathematically, (Lf)ij = (Ej - Li) - dij
The negative independent float is always taken as zero.
Event slack - It is defined as the difference between the latest event and earliest event
times.
Mathematically Head event slack = Lj – Ej , Tail event slack = Li – Ei

Determination of critical path

Critical event – The events with zero slack times are called critical events. In other
words the event i is said to be critical if Ei = Li

Critical activity – The activities with zero total float are known as critical activities. In
other words an activity is said to be critical if a delay in its start will cause a further
delay in the completion date of the entire project.

Critical path – The sequence of critical activities in a network is called critical path. The
critical path is the longest path in the network from the starting event to ending event
and defines the minimum time required to complete the project.
Problems on CPM
Problem 1
Determine the early start and late start in respect of all node points and identify
critical path for the following network.
Network Analysis Table
 Calculation of E and L for each node in the network

From the table, the critical nodes are (1, 2), (2, 5), (5, 7), (5, 8), (7, 10) and (8, 10)
From the table, there are two possible critical paths
i. 1 → 2 → 5 → 8 → 10
ii. 1 → 2 → 5 → 7 → 10
Problem2
Find the critical path and calculate the slack time for the following network
 Project Evaluation and Review Technique (PERT)
The main objective in the analysis through PERT is to find out the completion for a
particular event within specified date.
The PERT approach takes into account the uncertainties. The three time values are
associated with each activity
1. Optimistic time – It is the shortest possible time in which the activity can be finished. It
assumes that every thing goes very well. This is denoted by t0.
2. Most likely time – It is the estimate of the normal time the activity would take. This
assumes normal delays. If a graph is plotted in the time of completion and the
frequency of completion in that time period, then most likely time will represent the
highest frequency of occurrence. This is denoted by tm.
3. Pessimistic time – It represents the longest time the activity could take if everything
goes wrong. As in optimistic estimate, this value may be such that only one in hundred
or one in twenty will take time longer than this value. This is denoted by tp.
In PERT calculation, all values are used to obtain the percent expected value.

1. Expected time – It is the average time an activity will take if it were to be repeated on
large number of times and is based on the assumption that the activity time follows Beta
distribution, this is given by

te = ( t 0 + 4 tm + t p ) / 6

2. The variance for the activity is given by

σ 2 = [(tp – to) / 6] 2
Problems on PERT
Solution